New private health insurance exchange targets small and mid-sized companies

A new private health insurance exchange catering to small and mid-sized employers in Michigan will offer plans through two insurers: Grand Rapids-based Priority Health and the Health Alliance Plan.

The Royal Oak-based company, iSelect Custom Benefits Store, will provided defined contribution plans designed to help employers control costs while offering a range of options to employees, including medical, dental, vision and disability insurance.

The private exchange will provide businesses and workers with health insurance choices that can be purchased with pre-tax dollars, said Denise Christy, iSelect founder and chief executive officer.

Christy said research shows 85 percent of employers plan to continue providing health insurance – rather than pay a penalty - when the Affordable Care Act takes full effect in 2014.

Under iSelect’s model, an employer would work with an independent insurance agent in setting up a budget for benefits, then choose whether to offer plans provided by Priority or HAP.

They also would have the choice of offering ancillary products such as dental, vision and life insurance through other carriers arranged by iSelect. Christy said the plan will offer group-purchasing advantages for employers.

Using employer funds and their own contributions, employees will choose their coverage. However, under the Affordable Care Act, the employer must provide a plan that does not cost workers more than 9.5 percent of their income.

“As healthcare changes significantly in the next year, Priority Health remains committed to finding new and improved ways to address issues of cost, access and quality,” Scott Norman, vice president of Grand Rapids-based Priority Health, said in a statement. “We see our partnership with iSelect as one more way we are furthering this commitment and achieving our mission of providing all people access to excellent and affordable healthcare.”

The defined contribution approach makes clear to employees how much health insurance costs, Christy said. She hopes that will lead to a more consumer-oriented approach to health care.

“My hope is consumers will use the dollars wisely, follow the directions of their patient-centered medical home and be more compliant with health care,” she said. “We are moving Michigan from entitlement to engagement.”

Christy, the former regional president of Humana, also has held positions with Priority Health and its predecessor Butterworth HMO.

The focus of iSelect initially is on companies with 50 to 250 employees, she said. Priority and HAP are the private exchange’s exclusive providers for the small-group market. She sees both as leaders in providing patient-centered medical homes, which provide comprehensive, team approach to patient care.

“These guys know what they are doing in terms of the integrated health care model,” she said.